A Closer Look At the Consumer Discretionary Sector

As I mentioned yesterday, I'm going to spend some time this week looking at each sector of the market to see that the charts say. Remember, I'm working on the assumption the economy is either in or very close to beginning a recession.



The XLYs rose from 2003-2004 then consolidated for 2005-2006. They went higher in 2007 forming a double top in the first half of the year and have since fallen to 2005-2006 levels on higher volume,



The chart for the last year shows a clear pattern of lower lows and lower highs -- a classic bearish chart.



The SMA picture is interesting. This is similar to a lot of charts we're seeing right now.

-- The 50 and 200 day SMAs are heading lower, while

-- The short SMAs (10 and 20 SMAs) are headed higher.

-- Prices are below the 200 day SMA

-- Prices have recently broken below the moving averages. If this continues, the SMA s -- all of them -- will continue to move lower.